This is a follow up to First Premier Bank and the Credit Card that they offer. My original posting was this one: http://www.my3cents.com/showReview.cgi?id=33068 I was perusing websites today and came across this lovely information about how First Premier is trying to sneak under the legislation. If there was a way to shut this company down, I would do everything in my power to do so. Here's the comments:
Newest credit card trick? 79.9 percent interest
First Premier skirting new regulations intended to curb abusive practices
updated 5:42 P.M. MT, Thurs., Dec. 17, 2009
NEW YORK - It's no mistake. This credit card's interest rate is 79.9 percent.
The bloated APR is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. It's a strategy other subprime card issuers could start adopting to get around the new rules.
Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card's credit line.
In a recent mailing for a preapproved card, First Premier lowers fees to just that limit â $75 in the first year for a credit line of $300. But the new law doesn't set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.
"It's the highest on the market. It's the highest we've ever seen," said Anuj Shahani, an analyst with Synovate, a research firm that tracks credit card mailings.
The terms are eyebrow raising, but First Premier targets people with bad credit who likely can't get approved for cards elsewhere. It's a group that tends to lean heavily on credit too, meaning they'll likely incur the steep financing charges.
So for a $300 balance, a cardholder would pay about $20 a month in interest.
First Premier said the 79.9 APR offer is a test and that it's too early to tell whether it will be continued, according to an e-mailed statement. To comply with the new law, the bank said it will no longer offer the card that has $256 in first-year fees as of Feb. 21, 2010. However, customers will still be able to use their existing cards. The bank said "no final decisions" have been made regarding any rate changes for those cards.
First Premier noted that it needed to "price our product based on the risk associated with this market."
The bank declined to specify how many people were offered the 79.9 APR card.
According to First Premier's Web site, the credit cards are serviced by its sister organization Premier Bankcard. The company, based in Sioux Falls, S. D., says Premier Bankcard is the 10th largest issuer of MasterCard and Visa cards in the country, with more than 3.5 million customers.
In a mailing sent to prospective customers in October with the revamped terms, First Premier writes "...you might have less-than-perfect credit and we're OK with that." The letter notes that an online application or phone call is still required, but guarantees a 60-second status confirmation.
The letter also states there are no hidden fees that aren't disclosed in the attached form. That's where the 79.9 percent interest rate and $75 annual fee are listed. There's also $29 penalty if you pay late or go over your $300 credit limit.
Even if First Premier doesn't stick with the 79.9 APR, it will probably hike rates considerably from the current 9.9 percent to offset the lower fees, said Shahani of Synovate.
The revamped terms may not be the only changes; First Premier also appears to be moving away from the riskiest borrowers.
The bank typically mails offers to subprime households, meaning those with credit scores below 700. In the third quarter, however, 84 percent of its offers were sent to subprime households, down from 91 percent the same period last year, according to Synovate.
First Premier could be cleaning up its credit card portfolio since the new regulations will limit its ability to raise interest rates. That could mean First Premier won't issue cards as liberally to those with bad credit.
As harsh as First Premier's terms seem, that could be a blow to those who rely on the card, said Odysseas Papadimitriou, CEO of CardHub.com.
"Even when the cost of credit is astronomical, for people in true emergencies, it's much better than not having access to credit," said Papadimitriou.
Until Feb. 21, First Premier is still offering its even-higher-fee card online. So the price for credit the bank charges is at least $256 in first-year fees.
So, my day hasn't gotten any shorter and my fuse is almost lit. Ever since I declared bankruptcy 4 years ago, this lovely bank has been sending me unsolicited and unwanted offers. I decided to post this for everyone to let them know how bad they truly are.
First Premier Bank
The offer looks pretty good. "Your Gold MasterCard is Pre-Approved! 9.9% APR Fixed" the envelope shouts. Inside is an effusive offering that rattles on about the "premium benefits" and the attractive 9.9% fixed rate. For those with shaky credit, it sounds good -- no security deposit or savings account required.
Ah but wait -- what are all these fees on the disclosure statement?
* Account set-up fee: $29 (one-time fee)
* Program fee: $95 (one-time fee)
* Annual fee: $48
* Monthly Servicing Fee: $84 annually
* Additional card fee: $20 (if applicable)
* Transaction fee for cash advances: Greater of $5 or 3% of the cash advance
Oh but wait, there's more. There's ...
* Credit limit increase fee: $25
* Return item charge: $25
* Autodraft fee: $11 per draft or $7 for phone/intenet payment
* Express delivery fee: $25 for cards sent PRIORITY 2-day airmail
* Copying fee: $3 per item
* Wire Transfer fee: $5 per transaction
* Internet access fee: $3.95
This almost looks like a satire -- as though someone sat down and dreamed up as many fees as possible for comic effect. Program fee? Participation fee? Account set-up fee? Since when are these normal credit card charges?
Just to prove it's all heart, First Premier doesn't charge the whole $84 participation fee upfront, it parcels it out at $7 per month. Even so, adding up the start-up fees would be a minimum of $179 and possibly more if the mysterious copying fee, Internet access fee, etc. were added on.
The kicker to this ludicrous scenario is that the letter gives no hint what credit limit the consumer has been "pre-approved" for. It does say the initial credit limit will be at least $250. With a few hundred dollars worth of upfront fees, that doesn't leave much room for error. Naturally, if the account is delinquent for two consecutive billing cycles two times in any six-month period, the 9.9% interest rate suddenly becomes 19.9% and then reduced back to 9.9% if the account is kept current for 3 consecutive months or is paid in full.
All in all, it's a good argument for paying cash.
Beware that this company does business under several other names (Centennial Visa is one), but over the years, they are all still based in Sioux Falls, SD. If you see this on an envelope, throw it in the trash.
SIOUX FALLS, SOUTH DAKOTA -- I have been a Secured Credit Card user with First Premier Bank for several years. I called in earlier this year to ask if I could transition into an unsecured card. At the time I was given a series of hopes to jump through in order to do the transition. Because of the level of complication to do so I decided to close my account which at the time had been paid off except for $2 in automatic service fees from First Premier Bank. When I called I told the bank representative that I did not want to go through the lengthy process that had been described to me and that I would like to close my account and have the deposit and its interest sent to me as soon as possible. The last few account statements dated 03/26/07 has the last transaction of a payment (my security deposit of $336.34) posted on 01/26. I called on 04/03/07 and was told that no request had been made to return my deposit. I was told that I would need to make a verbal request (30 days before processing would proceed) or fax in a writing (7 days before processing would precede) request to receive MY money. I tried to explain to the service representative (during which I was talked over on several occasions) the fact that I had requested to receive my deposit with interest at the time of the first request. The service representative repeated during our conversation several times that it did not matter what was discussed during the initial call that if a mistake was mad by someone else at First Premier Bank that we could not look back we can only look forward this statement being an oxymoron nothing to with customer service. As of today it has been 65 days since my deposit was applied to the card balance. This is well past the 30 days request for my deposit First Premier Bank and are still holding on to my deposit. I am requesting my money As soon as Possible.
75061, TEXAS -- Talk about customer service gone bad. Well I have a story for you. I applied for a card from First Premier Bank and got a real one on one don't care hangup in your face attitude.
It all started a few months ago when a decided to rebuild my credit, so I bought a card. When I say bought a card I mean paying $178 in fees upfront for a card that was used only 3 times. I was charged $15 for late charges and I lose $178 for closing my account. That's not the end of it by a long shot. The bill collector that called me was rude and the Manager hung up in my face. Tell me what I should do someone please!!!! Angry father of 4 girls.